It has been a slow start to the week but GBP/USD has managed to climb back over $1.61 during today's trading session. The currency pair opened around $1.6090 and rose to a high of 1.6144 this afternoon following some weaker than forecast numbers from U.S. This small rise is the highest we have seen the GBP/USD for a week but that could all change over the next few days.
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What caused todays move?
Before the economic data releases from the U.S. the Sterling/dollar had been hovering around $1.61 and had remained within a 20 pip range all morning. This afternoons Flash Services PMI and Pending Home Sales numbers from the States both disappointed with both coming in under the predicted level.
The Pending Home Sales numbers will have had a bigger impact on the FX markets as they are a good indicator of overall economic health. This is because the sale of a home can trigger a number of other services which can boost an economy and with today's figure coming out at 0.3% against a predicted level of 1.1% the dollar lost ground against the pound and euro.
What to watch out for this week.
Although it has been a quiet start the rest of the week will see a number of key data releases from the UK and the U.S. The one that stands out though is the U.S. Federal Reserve (FED) meeting and statement on Wednesday. It is widely expected that the FED will finally bring an end to their stimulus package which they have been reducing since January of this Year.
If it is confirmed and the final $15 billion is wound up then there is every chance we will see the dollar have a bit of a surge on Wednesday evening. The announcement could easily bring the GBP/USD cross down and I wouldn't be surprised if I came in on Thursday to see the cross back below $1.60.
The only saving grace for those of you looking to buy dollars is that the cut in stimulus could already be priced into the market as the FED have been talking about finishing the programme in October for some time.
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